The New Gig Act, a tax reform waiting to be realized


(Preet) #1

The US Tax code has not been revised or updated since 1986. That means it is older than the internet and does not take into account the digital world. In comparison, it would be like having a tax code from the time of the Crusades in use during the Second World War, that is how far advanced the world has come in only the last 30 years. The digital age has changed the world of trade and commerce, the world of politics and foreign affairs, the world of medicine and science collaboration and it has started to change the world of logistics with Uber and Lyfts (actually Sidecars) excursions into ridesharing.

Uber's employment model is, in fact, a contract between the company and an independent contractor. This business model made it easy for Uber to overcome the problems of fleet financing and transfer the onus of car maintenance to private ownership, drastically reducing the overheads of a human transportation service.

Sen. John Thune and Rep. Tim Rice introduced the "New Gig Act" which is a tax update that takes into account the ridesharing status of drivers, as independent contractors, is now a commonplace employment type in the US. Their reform has come after a long enough time, just think back to 1986, what the world did not have then. It didn't have the WWW; it didn't have laptops or mobile devices, it did not have any of the common internet companies such as Google, Facebook, Amazon, etc. Steve Jobs was not as famous as he became, and Microsoft only started to become The Microsoft with its XT and AT DOS 3.1 operating system.

The internet has brought with it many changes, more than just ridesharing. It has created a whole new structure of social interactivity, built on an academic messaging system; the WWW has become the leading communications model for every conceivable transaction and interaction. Cloud-based sharing, Blockchain, and cryptocurrency are only part of this cybernetic meeting between hardware, software, and human.

The emerging sharing economy, what Uber forced into life with its global conquest approach, has forced everyone to recognize the importance of this new economic structure. 45million American citizens use it, and it is expected to increase by at least another 20% till 2020. These figures are based on current trends; we do not know what new trends might emerge. After all, house sharing is already in full swing due to Airbnb and other such companies.

The new act, introduced by Rice and Thune, will place the sharing sector well and truly on the map and will allow sharing economy contractors to work for as many different platforms and systems as they please. This new act has added definition and substance to independent contractors but does not specify the word "sharing" or "internet" in any way so it can be applied widely to any number of services that are current or will arise in the future.

As stated in the Congress portal:
https://www.congress.gov/bill/115th-congress/house-bill/4165/text

To amend the Internal Revenue Code of 1986 to provide a safe harbor for determinations of worker classification, to require increased reporting, and for other purposes. This Act may be cited as the "New Economy Works to Guarantee Independence and Growth Act of 2017" or the "NEW GIG Act of 2017".

The act itself does not address the sharing industry in name but it does in substance and as such addresses the issue of the newly founded independent contractor that is becoming more and more abundant with companies such as Uber, Lyft, DoorDash, Postmates and all the others. It puts drivers for these companies on the same stand as general independent contractors that are required to provide IRS tax reports at the end of the year. This new act makes the lives of the driver and their accountants much easier. It also allows drivers to work for more than one company without causing too many problems with the end of the year reporting since the report will be standardized as it is for general independent contractors that work with more than one client. Yes, Uber and Lyft will become clients to the drivers under this new act.


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